JESSI AMASON (ABU DHABI)
In a testament to sound economic strategy, the UAE has emerged as the sole country in the Middle East and North Africa (MENA) region to be featured among the top 10 in the Kearney 2024 Foreign Direct Investment Confidence Index (FDICI) released on Thursday.
The UAE ranked 8th place in this year’s index, a significant leap from its 18th place in 2023.
The country is ranked 2nd on Kearney’s integrated Emerging Markets Index, following China. The two countries constitute the only representatives of this category within the top 10 on the FDICI.
The MENA region as a whole experienced the greatest year-on-year momentum in the ranking, propelled by the UAE’s 10-place surge, accompanied by Saudi Arabia’s 10-place advance from 24th place in 2023 to 14th place in the 2024 index.
The UAE has pursued a policy of economic diversification, infrastructure development, and ease-of-business reforms in recent years that have increased growth across key sectors, garnering attention from foreign investors.
Although 85% of investors in the Kearney report expressed concerns about recent geopolitical tensions, especially the conflict that emerged in the Middle East in Q4 2023, the UAE continues to be a safe haven for foreign investment in the region.
Foreign Direct Investment (FDI) inflows to the country increased from $20.7 billion (Dh76 billion) in 2021 to $22.737 billion (Dh83.5 billion) in 2022, accounting for a staggering 60% of FDI inflows across all GCC countries and 47.1% of FDI inflows to the entire MENA region, according to the World Investment Report 2023 issued by the United Nations Conference on Trade and Development (UNCTAD).
Oxford Economics projected a robust GDP growth of 4.4% in 2024, citing strong performance in non-oil sectors and government initiatives, like the notable expansions of foreign ownership and investment rights in onshore companies that were introduced by UAE Federal Decree Law No. 32/2021.
The country has also invested considerable resources into creating a globally exceptional tech environment, which has driven growth in forward-leaning sectors like fintech, e-commerce, agritech, logistics, ICT, and renewable energy. Foreign-investment-friendly free zones further propel the country’s status as an FDI hub through facilities such as simplified licencing processes, strong research and development incentives, and 100% profit and capital repatriation authorisations.
The UAE’s premium infrastructure and commitment to further development enhances both business activities and quality of life, rendering it a compelling destination for foreign investment.
“The UAE’s remarkable ongoing rise in Kearney’s 2024 FDI Confidence Index is a clear reflection of its visionary leadership and decisive push towards economic diversification, which have firmly cemented the UAE’s position as a magnet for global investment,” said Rudolph Lohmeyer, Partner at National Transformations Institute, Kearney Middle East.
“Its higher ranking reflects growing investor confidence driven by the UAE’s sustained track record of policy reform. The UAE’s demonstrated resilience, state-of-the-art infrastructure, robust capital markets, and a thriving tech ecosystem enable it to offer a uniquely attractive value proposition for global investors,” he added.
Global Trends
In the global context, the index offered evidence that despite lingering concerns about risks, investors are largely showing signs of greater optimism in the investment outlook, with 88% reporting plans to increase their FDI over the next three years. The increasing prospects for artificial intelligence applications seem to be driving the optimistic outlook, with 63% of investors saying that their organisations will make significant or moderate increases in artificial intelligence use to steer investment decisions.
The index also showed that despite the US’s retention of the top spot for 12 consecutive years, disruptions are occurring in the slots below, with eight countries in the emerging markets category making it to the top 25 on the FDICI, five of which are members of the BRICS group, which accounts for roughly 40% of the global population and one fourth of the world’s economy.
The FDICI, now in its 26th iteration, offers an authoritative forecast of global FDI trends.